What to know : Justin Sun has sued Trump-family-backed World Liberty Financial in federal court, alleging the DeFi venture illegally froze roughly four billion WLFI tokens he values at about $1 billion. World Liberty has publicly dismissed the lawsuit as a meritless and “desperate” deflection while accusing Sun of unspecified misconduct, but it has not detailed those allegations. Sun’s complaint says World Liberty has privately blamed him for a 40% WLFI price crash, alleged short-selling, acting as a straw purchaser, improper exchange transfers and KYC issues, claims he denies as unsupported, and the firm has yet to formally respond in court.
Ten months ago, Eric Trump was posting on X about how much he loved Justin Sun. This week, he's likening a lawsuit from Sun to the infamous $6 million duct-taped banana.
Sun filed a complaint Monday in the Northern District of California, accusing World Liberty Financial of illegally freezing roughly four billion $WLFI tokens worth around $1 billion. The Trump-family-backed DeFi venture's informal Tuesday response dismissed the suit as a "desperate" deflection and pledged to keep protecting its users, with co-founder Zach Witkoff accusing Sun of "misconduct."
Neither he nor the company spelled out Sun's alleged misconduct. A spokesperson for the firm declined to comment, instead referring CoinDesk to Witkoff and fellow co-founder Eric Trump's posts on X.
The complaint itself may fill in the blanks. Sun alleged that World Liberty leveled a shifting set of accusations against him in private conversations and correspondence, none of which, he argued, the company has backed up with evidence.
According to the filing, World Liberty has at various points blamed Sun for the roughly 40% price crash $WLFI experienced on Sept. 1, 2025, the first day the token became tradable.
WLFI also claimed Sun drove down the price by short-selling perpetual futures on a centralized exchange, according to Sun's complaint, an accusation Sun said is false, and that the complaint notes would be difficult to pin on him, given his transfers happened hours after the steepest drop.
World Liberty separately objected to Sun's $100 million purchase of $TRUMP tokens from a different Trump-backed project, according to the filing, but Sun said this buy got the blessing of a Trump family member who is a partner in both ventures.
The company allegedly also accused Sun of acting as a straw purchaser for other investors in violation of his token purchase agreement, executing prohibited transfers to the exchanges HTX and Binance and submitting inadequate know-your-customer documentation, according to the filing.
"On September 25, 2025, Mr. Herro repeatedly threatened to report Mr. Sun to U.S. criminal authorities over these unspecified KYC issues — which Mr. Herro and World Liberty have refused to explain in anything other than the broadest terms despite repeated requests from Plaintiffs for additional information," Tuesday's filing said.
WLFI has yet to file a response to Sun's suit.
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